South American Silver Plummets As Bolivia Announces It Will Nationalize One Of World's Largest Silver Deposits

Anyone long silver miner South American Silver Corp today is not happy, because while the precious metal responsible for the company top and bottom line has risen significantly, it is our old nationalizing friend, Bolivian President Evo Morales (who last year caused substantial moves higher in silver with threats to nationalize various silver mines in his resource rich if everything else poor country) who has stolen the spotlight, with his latest announcement that he is on his way to nationalize SAC.TO's Malku Khota property, which the company describes as "one of the world's largest undeveloped silver, indium and gallium deposits" and which El Pais adds "is considered one of the largest undeveloped silver deposits, with reserves estimated at 230 million ounces, and at least 2,000 tons of indium, gallium and gold as well." Of course, while this is good news for the actual precious metals as it means much more supply is coming offline, it is very bad for mining and extraction companies such as South American Silver, which stand to lose one after another property to a repeat of last year's wave of nationalization. Indeed, at last check SAC.TO was down 27% today alone and plunging.

Bolivia will consider nationalizing Canadian miner South American Silver Corp's silver property, President Evo Morales said on Sunday, following violent indigenous protests against the mining project.

Leftist Morales, who last month took control of global commodities giant Glencore's tin and zinc mine in the Andean country, said he hadn't taken a final decision on whether to revoke the Canadian miner's concession.

"Nationalization is our obligation, I already raised the issue of nationalizing (the Malku Khota project) last year, and I told (local residents) to reach an agreement, because when they want we're going to nationalize," Morales told a farmers' gathering.

Exploration work, in which South American Silver plans to invest some $50 million, is expected to end within three years. The company describes it as "one of the world's largest undeveloped silver, indium and gallium deposits."

The Bolivian government withdraw the mining concessions awarded to the South American Silver Canadian company for the exploitation of silver deposits, indium and gallium Mallku Khota the hill, as agreed between government authorities and indigenous communities north of Potosi.

Agreement is reached, local communities agreed to free two engineers of the Canadian mining company and a police officer who had held for several days in order to pressure the government to listen to their demands to break the contract with South American Silver.

The Labor Minister Daniel Santalla, explained that the President Evo Morales is predisposed to reverse the mining concessions but that the decree will take several days due to legal and technical process should be launched for that purpose.

"Nationalize it is our obligation," said Morales in the city itself Colomi in the department of Cochabamba (center), barely a few kilometers from the mine site in question.

On Sunday the Bolivian Labor Minister, Daniel Santalla, signed an agreement to secure the release of the final three detained individuals with the indigenous opponents to the project. As part of this agreement the opponents were seeking cancellation of the mining concession, however, the government minister acknowledged that this could be difficult due to the original decree giving South American Silver the rights to the project.

Also on Sunday, President Evo Morales and the Government Minister Carlos Romero agreed that a "prior consultation” among all indigenous communities in the project area would be needed to proceed to determine the direction of the project based on the consensus view of all communities.

At this time there has been no change in the status of the project concession. The Company is continuing to work with the government at all levels and with the local communities to agree on an approach to development that is inclusive of all communities in the project area and allows development of the Malku Khota project to its fullest potential.

As noted in earlier updates, Bolivian government authorities have previously stated that there will be a period of constitutionally mandated consultation with local indigenous communities before the project enters the extraction phase.

On May 28 the Mining Minister Mario Virreyra signed an accord with 43 out of 46 indigenous communities in the project area specifying that the state will not reverse the mining concession and stating that the company should continue exploration activities and that Bolivian authorities should provide increased police security in the region.

The vast majority of the indigenous groups in the project area have formally demonstrated their support for the project and understand the social and economic benefits to their communities that the development of a world class, modern mine at Malku Khota will bring and which will create with thousands of well-paying local jobs.

By contrast, the artisanal mining that has been centered near one of three villages in opposition to the project would provide little economic benefit to the 43 other indigenous communities in the project area and has been cited by the Bolivian Mines Minister as causing local environmental damage.

South American Silver has worked closely with the local indigenous communities over the past several years providing significant direct employment on project related jobs, as well as jointly developing programs with the communities to facilitate job training, education, agricultural enhancement and water management for long-term sustainable development.

In conclusion, if before there was any doubt as to why miners trade at such notable discounts to the underlying precious metal, we hope that incidents such as this one give a good glimpse into the real ugly underbelly of what very well may happen to offshore projects if and when destitute countries decide to follow in the path of Argentina and Bolivia.

Just any who believe the conventional wisdom concerning owning mine companies in troubled times.

With the exception of a privileged few (kept alive for appearances, and use as a weapon) no miner will escape this outcome, as the legal systems will require this wealth in order to remain functional another day.

...but, but I thought gold and silver were just commodities? That's what all the super-genius Keynsian economists keep saying. They must have nationalized the silver mines as matter of tradition, like the FED holds gold.

Except that current circumstances are so far from normal, it's hard for most sheeple to imagine.

The central banks of the world are buying GOLD, not silver, which means they are going to use gold as money (more likely as reserves) again. This means GOLD will be revalued upwards (since they own it, and can offer to buy all gold at $xxx,xxx.00), but not silver (because they no longer own any, and it would not be in their interest to put a bid in for silver at $x,xxx.00).

Miners will work silver deposits to get the gold, and throw the silver away.

You are appealing to authority. Just because Central Bankers do something does not mean it is the be all and end all of investing. The CBs say fiat is the monetary standard. So I should sell everything and invest in dollars if I want money? No. Money by definition needs to hold its value, and precious metals do this at the molecular level.

Group think? You just said that the "group" (CBs) are against silver because they do not hold it as a reserve.

Make up your mind what arguement you want to have.

And in no way is my arguement for showing your arguement that you are appealing to authority is a strawman, when your point is that since CBs hold no silver silver is not a fair investment compared to what they do hold, gold.

Nowhere here have I discussed the GSR. Now you are just making shit up, Strawman.

Well, I have some FB, and some NTFLX, and I think maybe you work for the banks who WILL have the powers that be confiscate gold, so I guess silver's safer, as being a non asset class, and not tier 1 like gold will soon be, but it's GOOG for me. p.s. Gold re-valued once J6P cannot own it, sure it'll be. So to sum it up, I pick "B", LP, silver's "safer" of these two barbarous relics, 'cause you're correct in it being less likely to be confiscated.(but they're both awful "purdy")

I realize they confiscated silver too, it was also still a monetary metal (ever see a dime, quarter or dollar from the thirties?). Ever see one today? Copper-nickel. Silver's safer based on YOUR arguments, thanks for sharing.

The above ground supply of silver = the above supply of gold. Yet the price diference is 60:1. Let's speculate ;) and say demand for gold was equal to demand for silver bullion (it is, if not in silver's favor considering coins). Why wouldn't the ratio be 1:1?

Now this is speculation, but what is not speculation is that owning silver bullion has no counterparty risk and it defines money as its molecular structure maintains itself longer than anything, it is divisable, and it is a means of exchange, and has been for thousands of years.

Just because Bernanke does not agree, he who didn't know if he had any gold on his balance sheet (he does), doesn't change the facts about silver as money. If anything it means that there is a greater upside to silver, for if a Central bank did remonetize its debt via silver.....

Also, one point about all of this, there are Major Banking Houses that do own silver and use it as an asset. Barclays through their iShares, JPM through their ownership of iShares, and many other banks hold silver and use it as a reserve and asset to balance their books.

Amazing to me it took so much goading to get you to actually offer an argument. But thanks for finally doing so! And thanks for using the GSR as an argument, that's pretty funny, considering what you wrote earlier.

But anyway, refute THIS:

If you think silver will be used as MONEY, which means you will be using it in exchange for goods and services, then your argument works.

But if you think people (99% of which hold NO precious metals, gold or silver) will be using FIAT to exchange for goods and services, your argument is invalid.

If you think central banks (which hold GOLD and not silver), will revalue gold upwards to fix their balance sheets, then your argument that silver is less speculative is invalid, and financially suicidal.

The more people who hold a type of money, the less speculative it is. More people hold USD, making it the least speculative fiat currency.

More people hold GOLD instead of silver, making it the least speculative precious metal.

No, you are comparing apples and oranges now. Most people buy ammunition to shoot it, or to have it for destructive use later. If you have it for later sale should the price go up, then you are speculating, PERIOD.

People buy fine art because it is beautiful, and commercial real estate for a return. Neither is speculative, unless they are planning to sell it for more later.

Both gold AND silver are stores of value, the possible machinations of failing world central banks being largely irrelevant to the matter.

You implicitly put your trust in the actions of governmental central planning agencies to determine the value of gold, whereas I trust that the actions of individuals in the free market will eventually prevail in that determination. It is your wrongheaded assumptions that mislead you here, and which are generating so much backlash from others here who are not of the pro-central banking, pro-fiat currency, pro-government mindset that you apparently hold.

Gold is safer. I tell you why. It is safer to store and transport thousands of Dollars in gold as opposed to silver. The chances of escaping and carrying as much of the metal as possible when you're on the run are higher.

I've listened to you parrot long enough. Whatever I have in my pocket- gold, silver is safest. Why because I have it. It's a stupid riddle you make which is safer gold or silver ? Be specific. Whatever I got on me is the safest. Why? Because I have it in my possession.

When someone comes to me and tries to take it I have an answer for that too.

I could be wrong here but i do not know of any other significant point in history that gold moved and silver didnt follow it somewhat closely (the GSR that is). Is there any other period of time when gold was revalued dramatically and silver stayed at its then high GSR? Its possible silver stays at a 50:1 ratio after gold revalues to $50,000.. just not sure how probable that is. I believe both gold and silver are safe especially if no one has the forethought to own iether and you own a lot of both. BUT then again were talking the current paper price of silver/gold.

Can you name me a time when the G/S ratio stayed at such a high divergence after a global fiat currency implosion? BE SPECIFIC!

We don't speculate we buy physical and we don't care which is less or more speculative because we are buying both and we are holding to protect our wealth. Do you not even look at the downvotes your recieving? Your argument is weak just like your mind.

I have no crystal ball and havent a clue which of the metals will be safer in the future. I buy both in equal dollar terms on a regular schedule basis.

I know many of the arguments for one metal over the other one. To me, the opinon of the late, great former Wall Street broker Bob Chapman made perfect sense. - - We cannot predict the future, because the system is run by criminals and there's no way of knowing what theyll do in the future.

You pointed out the actions of central bankers, and claimed that only a fool would do something other than what they do. Pointing out that this is an appeal to authority is in no possible universe a straw man.

Wishful thinking is formulating a prediction of the future based off of what feels good, rather than reality. I don't think you understand what kind of Hell the silver reset will represent. Further, one person can't groupthink. You are talking to one person. Just because there are others with the same position doesn't make his thought process fallacious. If that were the case, almost any thought could be called out as such, making the accusation lose all relevence.

Holding silver is not more or less speculative than gold. It is EXACTLY as speculative as gold. They are both lumps of metal, the only difference is how an individual views them. If you buy it htinking it will go up in terms of paper currency, then you are speculating. Period. That is what you are doing with gold, and that is what we are doing with silver.

Because the death of the current fiat currency monetary paradigm is automatically going to mean the end of civilization if not the end of the world itself, is that it?

Spoken like a true central banker and/or one of their lackeys.

I am beginning to reassess my former evaluation of you as merely a Freegold cultist --- in your monomaniacal anti-silver trolling here, you are coming across much more as a paid shill and disinformation agent of TPTB, whether that is your intention or not.

I'm not going to make that arguement I was replying to your original post, I have no opinion on whether silver is any more or less speculative than gold. If I had capital I'd want a big chunk of it stored away in silver AND gold...

Pick the worst possible future scenario and hedge against it is a good policy in uncertain times. Financial speculators will eventually loose everything.

If Israel/US v. Iran gets hot, oil goes way up (as does the cost to extract all metals) while the global economy tanks and the servicing all those debts gets worse by an order of magnetude. It's just too tough to make change for a Kruggerand in a financial systemic collapse situation.

It's funny, because people seem to assume I'm advocating buying ONLY gold. Yeah, a few rolls of silver dimes, absolutely. Boxes of US nickles as well. Also ammo, food, medicine, etc. But after your survival needs are taken care of, IMO the rest should be in gold.

If you are buying silver in outsized proportion to gold, you are taking a risk that the central banks WON'T use gold to recapitalize the system, which is foolish. It's one of the few things they could do to preserve their existence.

Why would someone think they wouldn't do everything they could do to save their sorry ass jobs?

edit: So the FOUR down arrows indicate FOUR people here disagree with holding gold, silver, nickles, ammo food and medicine? LOLOLOLOL

I never said anything about speculation you did. I am comfortable with speculation. Besides I never said I did not own gold I probably have more than you as I have been at this gig since the eighties, A small clue would be my avatar. Chicks in gold and silver bikinis. Silver is just a way better investment right now in my opinion and I have done 2 years research from all angles.

Actually, when discussing cognitive infiltration before, it was widely predicted that when it was found that arguments for "conventional" investments or savings vehicles failed, the trolls would attempt to shift people away from silver and into gold. This was years ago, mind you.

So you see LP, prior to my boating accident, I was one of those foolish folk who had 75% PM in silver and 25% in gold. My own reasons were because both had value when I began aquiring them many years prior to my boating accident and my thinking was that in the event of some catastrophic economic event, most of the things I would need to live off of would not have cost me an ounce of gold to aquire. Most of the things I would need to survive in a semi-bartering system would probably cost me ounces of silver rather than an ounce or even a quarter ounce of gold. Using todays buying power of both metals, gold is definitely more portable, but if you are not running, silver would be much, much easier to conduct business with for most daily purchases. I get your argument about the banks revaluing gold, but silver has never, ever been left out of the equation. Where gold goes, silver goes to some degree or another. On a farm, would I rather have a good milk cow or 40 good laying hens? I want both. I can trade some of my hens for other necessities pretty easily. With my cow, not so easy. You get a little milk, you get the whole cow, or you get nothing. My 75-25 ratio was absolutely perfect for my emotional stability, prior to my boating accident. Now I am emotionally unstable.

right- gold and silver were both coin of the realm in rome. except, silver coin was debased and used to pay soldiers, gold (the actual coin) held its value (per Collapse of Complex Societies, Tainter).

silver and gold are always money. silver will not be outlawed. you can always sell the family silver, as it were, to settle debts, etc. even if gold were outlawed, those with gold coin can use it in the black market.

It's funny, because people seem to assume I'm advocating buying ONLY gold. Yeah, a few rolls of silver dimes, absolutely. Boxes of US nickles as well. Also ammo, food, medicine, etc. But after your survival needs are taken care of, IMO the rest should be in gold.

Who here has argued that silver is necessarily LESS speculative than gold? And even if they had, so the fuck what?

Here's "the fuck what?":

If you are buying silver in outsized proportion to gold, you are taking a risk that the central banks WON'T use gold to recapitalize the system, which is foolish.

It's one of the few things they could do to preserve their existence.

Why would someone think they wouldn't do everything they could do to save their sorry ass jobs?

There have been times when there was a gold standard when silver was not monetized. Why don't you tell us all what the price of silver in terms of gold was during that time (here's a hint: it wasn't 100:1, or 50:1, or even 30:1).

HAVE YOU LEARNED NOTHING? PUT ON YOUR CLOWN SUIT COMPLETE WITH YOUR COLORED WIG AND RED NOSE AND DONT FORGET YOUR BIG FLOPPY SHOES AND GO OUTSIDE AND ENTERTAIN THE KIDS WITH SOME ANIMAL BALLOONS YOU CLOWN!

"Like the Egyptians, Croesus (approx 660 BC) set the ratio of gold to silver at 10:1 as a matter of convenience...Croesus has established the first imperial currency in the history of the world. His beautiful coins of gold AND silver were immediately accepted-and indeed demanded throughout Asia Minor and were circulated in Greece on the Western side of the Aegean as well"

think about those words "matter of convenience"...how the hell do you think I'm going to pay for a gallon of milk, a loaf of bread or some bourbon with gold? Watch the film The Outlaw Josey Wales and you'll see how he buys some whiskey and beef jerkey at the trading post...with silver coins as a matter of convenience I suppose?

edit: 99% of people don't own any physical gold or silver save for some jewellery in a SHTF situation I don't know what the accepted ratio or forced ratio will be, its not my point, the point is silver has been accepted as money since the dawn of civilization even if not nearly as valuable as gold for equal weight.

Just want to toss this out there, but how do you know central banks hold gold? If they have any at all- could it already be leased and gone from their posession? If the gold is leveraged at 100 to 1, as most suspect, would not the central bank gold be used to cover claims?

Finally, if this line of reasoning is even partially correct, why would central banks value gold AT ALL? Would it not behoove them to remove gold and silver from the playing field and go to a different system of value alltogether?

Every thing is speculative, because we have no idea what is going on. We have no power to make demands. We have no political leverage to force the banker's hands. Governments are seizing assets and setting capital controls. In the end, if they want something, you don't think they can come up with a confiscation or windfall tax scheme to eliminate profit opportunities?

lol, looks like it. FOFOA is pretty smart even if freegold is delusional. His followers, on the other hand, are so thoroughly baffled with bullshit that they can't count the number of fingers on their hand, much less comment intelligently on PMs (aside from parroting, often poorly).

So you see LP, prior to my boating accident, I was one of those foolish folk who had 75% PM in silver and 25% in gold. My own reasons were because both had value when I began aquiring them many years prior to my boating accident and my thinking was that in the event of some catastrophic economic event, most of the things I would need to live off of would not have cost me an ounce of gold to aquire. Most of the things I would need to survive in a semi-bartering system would probably cost me ounces of silver rather than an ounce or even a quarter ounce of gold. Using todays buying power of both metals, gold is definitely more portable, but if you are not running, silver would be much, much easier to conduct business with for most daily purchases. I get your argument about the banks revaluing gold, but silver has never, ever been left out of the equation. Where gold goes, silver goes to some degree or another. On a farm, would I rather have a good milk cow or 40 good laying hens? I want both. I can trade some of my hens for other necessities pretty easily. With my cow, not so easy. You get a little milk, you get the whole cow, or you get nothing. My 75-25 ratio was absolutely perfect for my emotional stability, prior to my boating accident. Now I am emotionally unstable.